PUBLIC PROCUREMENT SYSTEMS AND BANK FUNDING IN RMCs

1. PUBLIC PROCUREMENT SYSTEMS AND BANK FUNDING IN RMCs ATTEMPTS TO INCREASE USE OF COUNTRY NATIONAL COMPETTIVE BIDDING PROCEDURES IN BANK FUNDED PROJECTS Vinay Sharma, Director, Procurement and Fiduciary Services Department African Development Bank September 2011

2. OBJECTIVE • To enhance the Use of Country Systems (UCS) in Bank-financed operations • PRINCIPLES • High standards – country systems strengthened and raised • Gradual transition – allow Bank to improve assessment capacity • Cautious approach for procurement – minimize fiduciary risks • Partnership – strong collaboration with development partners BANK’S POLICY ON USE OF COUNTRY SYSTEMS Bank 2008 UCS Policy Paper

3. EXPANDING THE USE OF COUNTRY NCB PROCEDURES The Bank’s Rules and Porcedures for Procurement of Goods and Works, approved by the Boards in 2008, in its Clause 3.3, provides for the use of a country’s National Competitive Bidding (NCB) procedures, in Bank-funded operations, provided that they are reviewed and modified to become acceptable to the Bank

4. EXPANDING THE USE OF COUNTRY NCB PROCEDURES • BANK’S STRATEGY: • Assessment of national procurementprocedures and internalcontrols • Increasing NCB thresholdstakingintoconsideration country capacity • Progressivelymoving NCB Contractsfromprior to post review

5. ASSESSMENT OF COUNTRY NCB PROCEDURES • PURPOSE • To examine country national procurement rules and procedures focusing on NCB procedures and documents • To determine compliance with Bank Rules and Procedures’ basic principles of economy, efficiency and transparency • To assess internal control systems and attendant risks • To use those national procurement procedures and documents, that are found acceptable, for NCB contracts financed by the Bank, in accordance with Clause 3.3 of the Rules.

6. THE NCB ASSESSMENT PROCESS • Review of country background legal and regulatory framework; • Description of country bidding procedures (ICB,NCB, other modes); • Examination of country NCB documents for Goods and Works; • Identification of deviations from Banks Rules for Procurement and from Bank’s SBDs; • Assessment of Fiduciary Risk (General Environment, Government Controls, Fraud, Corruption and Complaint Mechanisms); • Conclusions on Acceptability of Country NCB Procedures; and • Recommended Action Plan for filling any gaps found.

7. EXPECTED RESULTS FROM THE ASSESSMENTS • Country NCB Procedures Acceptable: - Recommendation to use the country NCB procedures and bidding documents without any amendments; • Country NCB Procedures Acceptable but with Minor Deviations: Recommendation to use the country NCB procedures and bidding documents but with some modifications outlined in an Action Plan, to be included in the financing agreement; and • Country NCB Procedures not Acceptable because of Major Deviations: Recommendation to use Bank procedures and SBDs while procurement laws/regulations and bidding documents are being amended or developed.

8. NCB ASSESSMENT IMPLEMENTATION STATUS • Assessments commenced in December 2009 • 45 RMCs completed by September 2011 • 80% of RMCs have NCB procedures and documents acceptable to be used on Bank-funded operations • NCB Global and Principal Action Plans recommended for improvement of procedures during dialogue with RMCs in all cases.

10. EXPECTED IMPACT Reduced Transaction Costs for Borrowers – Simplicity in Application, Reduced Procurement Lead Time, Increased Ownership Economy and Efficiency EqualOpportunity for Bidders Highest Level of Integrity and Transparency Accountability Fiduciary Responsibility –Rigorous Application Social and EnvironmentalConcerns

11. Thank you